Interim Report Q1
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Interim Report January–March 2012 Interim report January-March 2012 Page 1 Ahlstrom Corporation STOCK EXCHANGE RELEASE April 27, 2012 at 9.00 a.m. Ahlstrom interim report January-March 2012 Financial performance improving but below comparison period Continuing operations January-March 2012 compared with January-March 2011: • Net sales EUR 405.8 million (EUR 422.5 million). • Operating profit EUR 17.0 million (EUR 19.5 million). • Operating profit excluding non-recurring items EUR 17.4 million (EUR 19.7 million). • Operating margin excluding non-recurring items 4.3% (4.7%). • Profit before taxes EUR 12.4 million (EUR 14.3 million). • Earnings per share EUR 0.14 (EUR 0.14). Highlights in January-March 2012 • Ahlstrom launched new products, including metalized poster papers and embossable wallcoverings, with improved quality properties and sustainable features. Outlook for 2012 • Ahlstrom reiterates its outlook for 2012 published in February. Net sales from continuing operations are expected to be EUR 1,575-1,735 million. Operating profit excluding non-recurring items from continuing operations is expected to be EUR 60-80 million. Jan Lång, President and CEO: - We had a good start to the year as our financial performance improved clearly from the end of 2011. The operating environment remained challenging in our main markets, although it was somewhat better than we anticipated at the beginning of the year. The market development in Asia, however, has not been as positive as expected. - The work we have done in streamlining our cost base, addressing underperforming businesses and gaining efficiencies in the supply chain has started to bear fruit. We still have work ahead of us and we will continue to work vigorously on our key development programs. - In order to take us forward, we have identified five high priority programs; ‘Winning in Asia’, ‘Anticipating and delivering on customer expectations’, ‘Growing through differentiation’, ‘Implementing a high performance culture’ and ‘Achieving an efficient supply chain’. To achieve our target in growing through differentiation, we have intensified the development of our technology base with unique features. Share of profit Interim report January-March 2012 Page 2 Key figures from continuing operations Change, EUR million Q1/2012 Q1/2011 % 2011 Net sales 405.8 422.5 -3.9 1,607.2 Operating profit 17.0 19.5 -12.5 20.1 % of net sales 4.2 4.6 1.3 Operating profit excl. NRI 17.4 19.7 -11.8 49.7 % of net sales 4.3 4.7 3.1 Profit/Loss before taxes 12.4 14.3 -12.8 -6.6 Profit/Loss for the period 7.8 8.3 -6.2 -12.2 Earnings per share 0.14 0.14 -0.38 Return on capital employed, % 7.4 9.2 2.0 Capital expenditure 13.4 4.8 179.1 66.4 Number of personnel, at the end of period 5,093 5,149 -1.1 5,202 The Home and Personal business area is reported separately as discontinued operations. Operating environment In the first quarter of 2012, the overall demand for many of our products continued to be soft, although there were some signs of improvement towards the end of the review period. Geographically, demand in Europe was weak, whereas North America continued to show signs of recovery. The Asian market, particularly China, experienced a slowdown at the end of last year and the beginning of 2012. The global market for flooring materials picked up towards the end of the first quarter after a slow start to the year. The wallcovering materials market in China declined during the review period following a slowdown in the housing market, while demand for wallcoverings and wallpaper in Europe was at a good level. The market for specialty reinforcements used by the wind energy industry remained weak in Ahlstrom’s main markets. The market for transportation filtration materials in North America continued to recover in the first quarter, whereas demand in Europe was still soft. The advanced filtration materials markets served by Ahlstrom, particularly gas turbine and water filtration continued to grow. The markets for tape and food packaging materials in Europe and Asia were lower than in the comparison period. The demand for medical materials rose. The demand for the majority of the specialty paper materials produced by Ahlstrom’s Label and Processing business area, particularly flexible packaging and release papers, declined during the review period. The market prices of Ahlstrom’s main raw materials, such as pulp and synthetic fibers, started to increase again in the first quarter after having fallen during the second half of 2011. However, prices remained below the comparison period except for specialty pulps, such as mercerized cellulose. Prices of chemicals in general continued to decline, although they remained at a high level. In its production, Ahlstrom uses chemicals such as latex, titanium dioxide, starch and clay. Share of profit Interim report January-March 2012 Page 3 Development of net sales from continuing operations Change, Net sales by business area Q1/2012 Q1/2011 % 2011 Building and Energy 68.5 82.0 -16.4 296.2 Filtration 87.5 82.3 6.3 324.5 Food and Medical 89.0 93.4 -4.7 361.9 Label and Processing 168.5 181.7 -7.3 678.1 Other functions* and eliminations -7.7 -16.9 -53.5 Total net sales 405.8 422.5 -3.9 1,607.2 * Other functions include financing and taxation-related items, as well as earnings and costs belonging to holding and sales companies. January-March 2012 compared with January-March 2011 Ahlstrom’s first-quarter 2012 net sales decreased by 3.9% to EUR 405.8 million, compared with EUR 422.5 million in the first quarter 2011. The decline was mainly due to lower sales volumes. Higher selling prices and a favorable currency effect, mainly as the U.S. dollar appreciated against the euro, had a positive impact on net sales. Breakdown of the net sales change: Change, % Q1/2011 Price and mix 0.8 Currency 1.1 Volume -3.3 Closures, divestments and new assets -2.4 Q1/2012 -3.9 Total sales volumes in tons fell 5.8% from the comparison period. The decline affected sales volumes in all business areas; Building and Energy (-21.0%), Filtration (-1.1%), Food and Medical (-11.0%) and Label and Processing (-2.7%). Total sales volumes, excluding the impact from closures, decreased by 2.9%. Share of profit Interim report January-March 2012 Page 4 Result and profitability from continuing operations Change, Financial result by segment Q1/2012 Q1/2011 % 2011 Building and Energy Operating profit 2.7 3.1 -14.4 -27.8 % of net sales 3.9 3.8 -9.4 Operating profit excl. NRI 2.7 3.1 -14.4 1.2 % of net sales 3.9 3.8 0.4 Filtration Operating profit 6.1 7.1 -14.3 22.8 % of net sales 6.9 8.6 7.0 Operating profit excl. NRI 6.3 8.2 -23.2 22.0 % of net sales 7.2 10.0 6.8 Food and Medical Operating profit 2.2 3.0 -26.9 12.0 % of net sales 2.4 3.2 3.3 Operating profit excl. NRI 2.2 3.0 -26.9 11.7 % of net sales 2.4 3.2 3.2 Label and Processing Operating profit 5.7 6.2 -7.6 11.6 % of net sales 3.4 3.4 1.7 Operating profit excl. NRI 5.8 6.2 -6.6 13.6 % of net sales 3.4 3.4 2.0 Other functions* and eliminations Operating profit 0.4 0.1 1.5 Ahlstrom Group total Operating profit/loss 17.0 19.5 -12.5 20.1 % of net sales 4.2 4.6 1.3 *Other functions include Operating profit excl. NRI 17.4 19.7 -11.8 49.7 financing and taxation- % of net sales 4.3 4.7 3.1 related items, as well as earnings and costs belonging to holding and sales companies. January-March 2012 compared with January-March 2011 Ahlstrom’s first-quarter 2012 operating profit was EUR 17.0 million (EUR 19.5 million), including non-recurring items of EUR -0.3 million (EUR -0.2 million). Operating profit excluding non-recurring items was EUR 17.4 million (EUR 19.7 million). Operating profit was negatively impacted by lower sales volumes and the resulting increase in market related downtime in production at plants, and higher energy prices. The profit improvement program implemented at the end of last year, improved product mix, efficiency gains in the supply chain and lower raw material costs had a positive impact on profitability. The first-quarter 2012 profit was also positively affected by the release of annual remuneration accruals worth EUR 2.8 million from 2011. The commercialization of the biodegradable teabag material line in Chirnside and the medical material plant in Mundra continued with successful product trials. The La Gere plant, part of the Label and Processing business area, made a positive contribution to operating profit after a challenging ramp-up of a major investment. Share of profit Interim report January-March 2012 Page 5 Ahlstrom’s market related downtime in production was 6.0% in the first quarter of 2012, compared with 5.9% in the corresponding period. Profit before taxes was EUR 12.4 million (EUR 14.3 million). Income taxes amounted to EUR 4.6 million (EUR 5.9 million). Profit for the period was EUR 7.8 million (EUR 8.3 million). Earnings per share were EUR 0.14 (EUR 0.14).